Ares Capital Corporation (ARCC) Earnings Call Transcript & Summary

Hi. Good morning, everyone. So we're pleased to have Ares Capital Corp. with us today. I'm joined by Kipp DeVeer, the CEO, will be doing a fireside chat format, and we have a number of prepared questions that we'll be going through. If anyone in the audience would like to ask a question, please click on the upper right-hand hosting your screen to ask a question button, and I'll try my best to address it during the presentation. We also have a couple of polling questions for the audience, so I would encourage the audience to [indiscernible] will publish those following the conference. So with those comments out of the way, welcome to the conference, Kipp.

Thanks so much, Terry, for having me.

Yes. I'm delighted to have you. So we'll just get started. I just want to start off with an update on your portfolio. It held up very well through the depth of the pandemic last year. And it appears to have most of the recovered with NAV at an all-time high. So can you maybe just provide some color on the trends you're seeing currently?

Yes, for sure. Look, it was an interesting one for sure as COVID came on and we have certainly managed this company through a handful of different credit cycles, so this one is pretty different, right? Obviously, with just complete shutdowns businesses that at certain periods, just were closed, had no profits for 6, 8 weeks at a time. So that was pretty unusual, very much liquidity-driven type of downturn. But the good news is we've seen really broad-based improvement across the portfolio, including the names that were impacted by COVID. It's been a bit of kind of a have and have nots recovery, right? So the places where there's still a little bit of weakness are places where we are generally underexposed. Things like travel and hospitality and all of that is obviously slow to come back. But we're positioned generally across defensive industries mostly, right? So things like health care services, consumer, commercial and professional services and all of that have come back pretty well. We've seen average EBITDA growth rates substantially better than even we've seen in the economy because of that positioning. Software and services has been a bright spot for sure. So yes, I mean, Q2, I think unrealized gains were about $150 million, largely driven just by continuing kind of improvements in portfolio.

Got it. That's good color. Has the recent surge in the Delta variant caused any issues for your portfolio companies? Or are there any risk you're thinking about because of the varying issues?

Yes. I mean, look, the short answer is no, or at least not really. I mean we have concerns about it, of course. I think though that we have moved past let's pray that we've moved past periods of lockdown, shutdown and all of that and companies, people, the country, et cetera, are all learning to live with obviously a new virus. And the good news is the vaccination rates continue to climb. And I think the science would say that most people are reasonably well protected against COVID, which if there's a breakthrough case somewhere seems, to be a lot like the flu, right, which is something that we're already comfortable living with and dealing with. So we haven't seen companies that were involved with change the way that they operate at all with delta. Obviously, people have heightened concerns and there are more things to think about or perhaps worry about that we hope would be behind us. But nothing earth-shattering on the Delta front.

Yes. Okay. That makes sense. So I wanted to turn to the investment environment. How is that shaping up so far in the third quarter? And what are your expectations heading into the end of the year?

Yes. I mean I think, look, it's been a busy year, right? I mean we're coming off one of the busiest summers that we've ever had, and I'd expect the rest of the year to be pretty busy, too. You're seeing good growth. I think, obviously, there was a long period of time last year where folks were on the sidelines, right? Q2 for us was a record origination quarter on the second earning -- on the second quarter earnings call, we talked about the backlog and pipeline, which was more normalized, right, at around $1.5 billion. But that's still 20% higher than what we see on a 3-year kind of running average basis. So we're busy. There's a record level of private equity dry powder, right, that needs debt capital. So certainly the private equity space is alive and well again. And I think there's been a shift. 2020 was definitely a year that reminded companies and private equity-backed companies or entrepreneur family-owned companies provided them real evidence of the benefit of a direct solution, right, with the provider that's going to be a capital partner and be there for the long haul, isn't reliant on the public markets to syndicate a transaction, et cetera, et cetera. So I think all the structural drivers that were in place just got sort of accelerated during last year and really cemented themselves. So I think it's going to be a very busy back part of the year and frankly, should continue to be busy into next year.

Okay. Got it. So it looks like the outlook for '22 is it's going to continue to be strong. But is there any part of the investments that you would consider kind of like a pull forward in activity?

Look, I mean as I said Q2 was a record quarter, right? So I think we'll repeat Q2 anytime soon? Probably not. I mean it's typically a busy quarter. I think some of that pull forward we really talked about and saw evidence of in Q3 and 4 of last year. But no doubt, look that activity just continued. So I think for us, as I look at that backlog and pipeline and as we sit here sort of the middle of September, we're running at kind of normal busy, right, sort of normal to a little bit busier than normal. I expect quarters more in line with an average quarter for us going forward. But we'll see. I mean, I think we've picked up some market share during the downturn. I think how we handled COVID and presenting ourselves as a healthy company and one that was able to support our borrowers has enhanced the company and has actually increased our market share during that period.

Got it. Okay. So what about the current state of competition? Are you still seeing an influx of capital coming into direct lending and or are competitors acting rational right now?

Look, I mean, I think that there's still very good risk/reward generally in the illiquid credit asset class. And I think that our investors broadly have changed the way that they allocate to the space, right? So there's an increased acceptance of generally illiquid credit strategies, which, of course, includes U.S. direct lending. So there is definitely the desire on the part of our investors to support us in everything we're doing, right? So ARCC, obviously, has continued to grow, having done 2 equity deals in the last 12 months. That's unusual for us, but we found this was a great period for us to, again, consolidate share and grow. And we've done a fair amount of capital raising on the private side, too, because we still believe that, that capital scale is an advantage and the market is growing. In terms of rational competition, look, we see a lot of the same folks competing for deals now that we did a couple of years ago, right? We think generally, it's been a competitive market, but an investable market. One of the things that we, of course, benefit from is the fact that we've been doing this a long time and that we've got a very large portfolio. And we say it over and over again, but those incumbency advantages of being able to just support your winners and keep growing with your company is obviously at ARCC, which has to is very powerful, right? We don't see a lot of our companies go back out to the market to do a deal away from us if they're happy with us as a capital partner. So that's a real advantage. But on the new deal, look, I mean, it's competitive, but not so much because of inflows. I think in fact, a lot of the inflows coming into the space are coming to people like Ares and some of our larger competition that have well-established track records and obviously, a lot of trust from their investors. And for us, it's just -- it's incumbent upon us to deliver returns for our investors, right, that are commensurate with their expectations, and we can manage that capital raising, right? We don't -- by no means do we take in all the capital that I think we could because we don't feel that we could deploy it well and achieve the returns that we think our investors are looking for us to achieve for them when they come into direct lending.

Got it. That's helpful. So putting all the pieces together that we just discussed, how would you characterize the overall investment environment relative to past years? And how is ARCC positioned going forward with its investment strategy?

I mean our investment strategy is the same, right? I think what we've continued to emphasize really is making sure that we have a very broad-based approach, both from the way that we originate, but also from the flexibility of the way that we actually invest, right? So over the last bunch of years, we've continued to build resources away from -- I think a lot of people think of us as a sponsor back lender only, which we're not, right? And we continue to remind people of that. We obviously have very large sponsor coverage teams. And the investment environment in the private equity-backed transactions is probably the most competitive because I think that's the easiest business that we're in. So we think it's competitive, but we'll put our relationships and our capital and our expertise up against any of the competition. I think we're winning more than our fair share. In terms of other things that we've done and I've mentioned this in other public formats, we've really focused on building the origination team, so it's deeper, and it has more expertise in areas like software and services, health care and life sciences. We've got a very significant business investing in power, both traditional and renewables. So all of these areas allow us to be deeper in our industry experience, and that helps us go direct to companies, whether it's through advisers or just direct to company and calling. But again, the strategy is the same. We're trying to find good companies. We're trying to see as much deal flow as we can, and again, be selective. And I think we're in as good a position as we've ever been in terms of how we're competing with others and where we stand in the market.

Got it. That's helpful. So I wanted to touch on deal activity and commitments for a second. You noted on the last earnings call that over the past few quarters, commitments have been about 30% higher than average. Is that more a function of just higher deal activity or market share gains? And I know you mentioned the market share gains previously. So maybe can you just expand on that?

Yes. Why don't I just answer that? I mean specifically, look, I mean I think we're in a large and growing market, right? There's increased acceptance of direct lending, the ability to do larger transactions with significantly more capital is there for us, right? I think the banks continue to move their strike zone up, so to speak, a little bit in terms of their desire to do larger and larger deals with bigger borrowers that are easier syndicates. We've got all those tailwinds, but I do think that we really enhanced our competitive positioning and, I think, gained market share during COVID because we did have some competition, many of whom did and do still have great reputations as competitors to ours, stumble a little bit. There were questions about folks who had maybe some balance sheet issues, some funding issues, lack of desire. I don't want to say inability, but lack of desire to do amendments that made sense or provide more capital in situations where they were, in fact, committed to do that, right? So funding revolvers, funding delayed draws. And when counterparties see pushback on that front, it's not something that obviously helps build the relationship, it strains the relationship. And I think we were a company that faced off during a difficult time with our counterparties, whether it was companies and their owners or private equity sponsors in a very rational and measured way and found solutions for companies that struggle during that really difficult early period of COVID. But I think even more importantly, we are open for business the whole time. And we're getting phone calls in May of last year from folks saying, look, we're still trying to do some things or we're trying to do an add-on acquisition in this portfolio company. Are you guys okay to work on it with us? And we say, we're more than okay, we're thrilled to work on it with you, right? And that goes a long way. It just really continues to cement our spot at the top of the heap relative to the competition. And I think reinforces what a capable and sort of long-term provider we are. So I absolutely think that some of the activity is just the fact that it's busy again. But I do think that we've gained some share during this period.

Got it. Can you talk more about the distinct competitive advantages that ARCC has? And what is differentiated about ARCC that other direct lenders don't have or can't do as well?

Yes. I mean it's the same things that we always remind people about, right? So scale of team, right? We think we have the largest both sponsored and nonsponsored coverage teams in the space. Scale of capital, right? So we can do small deals, we can do large deals. Flexibility of capital is important, right? So we're not a one-trick pony. We don't just come to the market saying, "Hey, we want to do $300 million unit tranches and when folks are looking for a different solution than that, we ride off into the sunset," right? We're able to do everything up and down the balance sheet to really tailor solutions to a company's needs. And I think that flexibility of the approach remains useful for people, right? And the fact that we can be nimble from deal to deal. I think that the fact that, look, our leadership team at this company has been together for 16, 17 years running this company, but 20-plus years prior to that. So there's a real consistency of approach, an investment strategy that frankly is unchanged from 20 years ago that's in place. And I think folks see us as a stable platform, right? They say this is -- these guys know what they're doing. They seem to be able to manage this company well through any period of time, whether good or bad. And look, we have to be at the market, right, in a competitive situation, which we always are. But I think that we just proven that with long-term capital and the management team has been together a long time that we're reasonably easy to work with, right? We've been through the good with people. We've been through the bad with people, and I think we've acted fairly and reasonably in all those circumstances, and that goes a long way.

That's helpful. So the company has been underwriting larger portfolio companies over the years, and the portfolio has seen an increase in weighted average EBITDA. So can you maybe just speak to this shift? And what is the strategy with underwriting of these larger companies?

Yes. So I'd say as the company has gotten bigger, and as the addressable market has grown, we've just been able to take these same private capital solutions that maybe 15 years ago, a big deal for us was $100 million, $200 million. Now a big deal for us $1 billion, $2 billion, right? So the ability to support these larger companies is there. And I think the larger companies see the benefit of actually having a capital partner that's not just underwriting and syndicating to a group, right? The real advantage in a syndicated transaction is that you can often achieve a lower cost of capital. So if that's first and foremost, in some of these bigger deals, we may lose to a syndicated kind of rated transaction. But more often than not, the partnership approach, again, the flexibility of the capital, the ability to provide certainty of close and talk about long-term investment with the business is really advantageous, right? And folks are very often, even in larger companies, happy to pay a little bit more to have a partner that they know and trust and kind of know is with them for the long haul. So we're investing in these larger businesses because we think they're, frankly, as good or better in terms of resiliency and credit metrics, right, than a smaller company inherently probably have a larger market that they're playing in or have a larger share if the market probably have a better management team that smaller businesses, et cetera, et cetera. But I do just want to remind you and everybody who's listening to, by no means, does that mean we don't still want to finance $10 million EBITDA companies, we do. We probably will price them a little bit differently than we'll price $150 million EBITDA companies. The cost of capital should be higher. And we found actually over the last couple of years that there really is a fair amount of parity between what you see financing terms for a $10 million, $15 million EBITDA company that you see for $150 million EBITDA company, and that doesn't make a lot of sense to us, right? We want to extract more premium for smaller companies. If I had to comment back on your point on competition, the place where we've seen the new entrants and the competition to be the most difficult is actually, in fact, at the lower end of the market, right? Because if you're limited in your scale and coverage and you can only write $50 million checks in a deal, it's much easier to kind of grind the folks down to the lowest common denominator in these small deals. Whereas in the larger deals, we actually have real advantage by being able to be a leader and provide a fully scaled capital solution that we can stand behind. So I think there's extraordinarily good value in that segment of the market, which is why we continue to kind of play there as often as we can.

Got it. That makes sense. So in terms of just the return potential between these larger companies versus the core middle market, is there a notable difference? How do you think about that?

Well, I think, as I said, that they're about the same, which doesn't make a lot of sense to us, right? When we're financing smaller businesses, we typically see them as having more risk, right? And from a credit perspective, they usually do, right? They're usually either relying on fewer products or they have a less diverse customer base? Or they're geographically cornered, right? Like a smallish restaurant business that maybe is only in the Southeast, for instance, right? It is inherently riskier than one that obviously operates across the country. So I think that risk-reward should shift again as folks look at credit performance in the larger businesses versus the smaller ones. But we're still active across the continuum, right? We want to see everything, and we're just going to make risk-reward decisions based on what we see on a deal-by-deal basis. And again, keeping that origination engine cranking is really important, and it's allowed us to continue to be selective in what we do. We still only close probably 4% or 5% of the transactions that we review, right? And I made the point about incumbency. We love continuing to work with our winners, right, because they're known to us. There are no surprises there. We've underwritten them. They're sitting in the portfolio, and we can continue to back them. And that usually is lower risk, and we're not taking less return to do that, right, once they're in the portfolio. So I think there's great risk reward there from sticking with your winners.

Got it. That makes sense. And in terms of the right mix, I guess, the larger versus the smaller core middle market companies in your portfolio? What is the right mix? Is that going to continually shift as we move forward?

I think it will just be -- we don't have a target, right? I mean we're literally just trying to invest in good companies and put what we think are sensible capital structures in place that obviously create good returns for our investors. I think it will shift based on that relative value lens that we can apply all the transactions, but we don't try have a distinct target where we're saying we want to have 1/3 of the portfolio in upper middle market or et cetera, et cetera, you know what I'm saying.

Got it. That makes total sense. So longer term, where and what are the growth opportunities for Ares in the direct lending market?

I mean I think there's good continued growth, right? We think that the U.S. direct lending market today is about $1.5 trillion of just installed base, right? So that's the existing universe, our companies and others, we think that will grow, right? We think there's increased -- again, touching on some of the points that we touched on earlier. Increased acceptance and also ability, right, to do large deals. You've seen a growing number of $1 billion to $2 billion unitranche transactions, which obviously supports that thesis. You've got a huge amount of private equity dry powder out there that's going to look to continue to buy companies. My guess would be to take companies private, right? If the stable private business is out there isn't sufficient. And look, for every $1 billion or so of private equity out there, you need at least $1 billion of debt, right? And I think that, that activity will continue, right? We're in a very low rate environment. The use of debt, obviously, to finance transactions is attractive to borrowers so long as you don't put yourself in an overleveraged position. And all these asset classes, whether it's private debt or private equity, have proven to be really resilient during what's been a difficult period. And I think we'll continue to attract investor interest. So I think the M&A and deal activity side is there. I think the investor support side is there, and I think the appetite from borrowers is there. So I think we're in a great position for growth going forward.

Got it. That's helpful. So I have a question from the audience. It's on nonaccruals. The rate has come back down in recent quarters. Can you just talk about what's driving that and what the long-term strategy or philosophy around nonaccruals is at Ares?

Yes. I mean the long-term philosophy is that we'd like to have none, but it never really works out that way. Look, we are very hands on in terms of the way that we manage the portfolio. And I mean, I'll just say that. The philosophy of how we invest is every deal professional originates, executes, monitors as investment professionals, all of their portfolio companies, but we, of course, supplement those teams with a dedicated portfolio management group that only focuses on troubled situations, right? So things that are grade kind of 2 and 1 in our portfolio that require a lot of extra attention. And we are not shy to step in and work our nonaccruals, right? There are some companies in the space that I think something goes on nonaccrual, becomes a problem. They don't really know what to do with it and we figure out the first way out regardless of price. They can manage their nonaccruals probably to a lower number than we can, right? But what we want to do is achieve the best recovery in situations where we have nonaccruals. And I think we've got a long history and frankly, a team that's very capable in doing that. So the decline in nonaccruals is something that we expected. And we're hoping, right, again, COVID, call it, Q2 and Q3 of last year was a pretty difficult period. So obviously, there was a pickup in nonaccruals there as companies had liquidity from. But we've gone in and done. I can't even remember the number at this point, I want to say 60 or 70 amendments, right, on the portfolio over the last 18 months and figured out ways to get some of these companies back on their feet, and they're back to paying is interest, which is great. So again, back to where it is. It's never going to be 0. But the goal is, of course, after the spike because of early COVID, we've been able to, I think, manage the portfolio well and get those numbers to sort of decline on a quarterly basis. I think it since last September, we've seen positive portfolio management in terms of its direction since really over the last 4 quarters.

That's helpful. So switching gears a little bit. I wanted to talk about the nonqualified bucket for a little bit. How do you view that strategically? I think it's currently about 17% of the portfolio today. And historically, it's been higher than that.

Yes, yes. So we've never been a company that is thought about the 30% basket necessarily strategically, right? And I think some folks -- like anybody has made a dramatic mistake, but I think it gives you latitude to do some things that maybe are outside the comfort zone are really outside the mandate of, I think, what you're supposed to do in a [ VAC ], which is invest directly in private companies, right? So it's there to allow you to invest in maybe a larger market, larger public company and obviously cover some other things where you're generating income from partnerships and some nuance things. But really, what we've done as many people know, is we've used it to do 2 things, right? We've built joint ventures in the past, with GE, and now with Varagon and a couple of insurance companies that allow us to provide, I think, a really cost-effective unitranche fund, right? It used to be SSLP, now we have SDLP that I think is an advantage in marketing to borrowers. And it obviously allowed us to build Ivy Hill, right, which is an asset management company that invests in bank loans. And the genesis of that was really the great financial crisis when rates went from 5% LIBOR to 0 is very difficult for us to own bank loans on the BDC's balance sheet. Ivy Hill was created to be an asset management company that we own that could focus on retaining a lot of those bank loan assets that we're originating. And they've all been really successful investments. But things that other people have done that we frankly don't want to do buy third-party CLO securities in there. We're just never going to do that. Do we have thoughts around ownership stakes and other finance companies, maybe, right, could we do it? We can do all the things that other people could do or have done as an opportunity. Do you want to own an equipment finance business? Do you want to own an asset-based lender, et cetera. So all those things are opportunities for us. But I think the nonqualified bucket today is around 15%, 20%, right? We have room and opportunity to do things to the extent we find something that is strategic and exciting in the way that these joint ventures and Ivy Hill were in the past, but we don't have any strategy head who is out there trying to maximize the 30% bucket? I just -- I think it creates as much risk, frankly, as it does opportunity.

Got it. That makes sense. So you touched on the SDLP. Can you maybe just dive a little deeper and talk about the strategy there? It's a smaller portion of the portfolio compared to what the legacy program was in the SSLP. So maybe can you just talk about that?

Yes. I mean it's obviously, I mentioned a partnership that we have with Varagon and a couple of insurance companies. The way that the joint venture is structured is, it allows us to bring some lower cost capital into that joint venture that's insurance money that I think, again, allows us to do unitranche deals together with Varagon up to $300 million hold sizes, I think, at very advantaged pricing to borrowers. And they tend to be situations where those borrowers know us and Varagon and probably 1 or 2 of the insurance companies, too, and it makes sense. The scale of that program, I think, will continue to grow, but frankly, we'll never be as large as the program that we have with GE, right? That was happy it's long behind us, but the winding down of GE Capital and the winding down of our SSLP with GE Capital was not a particularly enjoyable exercise. So I think if we learned the lesson there, it was never have a joint venture with a partner that's that large, that's that substantial with our company that can have the negative impact that, frankly, the wind down of SSLP had on the company, not hugely negative, but for a couple of quarters, we really had to run that off and it wasn't all that enjoyable. But look, the partnership today is a great partnership. Folks have said now that you can run the higher leverage, when you wind it down, we see absolutely no need to wind it down. It's a nice competitively advantaged product, and we like our partners. So everything there is going well.

Got it. That's helpful and that makes sense. I have another question from the audience. It's on fee income. As deal activity has increased, so has fee income, how sustainable is that? And has ARCC become more reliant on fee income?

So I think it's something that's more available to us today for a couple of reasons, right? We're doing larger deals. Some of those larger deals include being a syndication partner on first lien deals, and we've really built capabilities there that are fully kind of actioned and effective today, right? So we've got a 10-person capital markets team that really is focused on that. Is it sustainable? I think over the long term, it's sustainable, but it sort of comes and goes, right? It's relying on, is there a large transaction or 2 in a quarter? Is it sustainable at a base level from a quarter-to-quarter basis? It is. But we've put up some pretty significant fee income quarters, right, I think, which is where the question is coming from over the last 6 quarters, which is great. But I am not -- we look through maybe that big quarter of fee income, that excess fee income is just something that allows us to build more NAV, allows us to outrun the dividend. But obviously, we're not going to raise the dividend thinking that we're going to make $80 million a quarter in fee income going forward, right? There's a base level we feel comfortable with as part of normal activity, and I think you'll see the dividend in line with more of that baseline fee income than maybe the accelerated fee income you see in certain quarters. but it's certainly a good thing for the economic value of the company. It's a good thing for the shareholders. And I think where we have capabilities like that, right, to generate income, why not?

Got it. So that's good. You touched on dividend policy for a bit. Maybe can you give a little more color on that? And what's your thinking on just general level of spillover income that you have available and the fact that your core earnings is still nicely above the raised dividend?

Yes, I think -- look, we look at the dividend every quarter. I think we're taking a particularly hard look at it now because we've got a handful of quarters now in a row where we've continued to just demonstrate earnings well in excess of the dividend, right. Back to the prior question, I/we look at that number, and I will back out something that I view as potentially not recurring, right? A couple of big fee events in a quarter that I don't want to increase the dividend on the backs of. But even once we strip that out, it's very clear to the credit that the earnings are in excess of the dividend, obviously. So we just increased the dividend $0.01. It was a very easy increase for us. Could we -- should we have done more? Maybe. And I'd just say that, look, we're evaluating the dividend as we speak relative to the current environment. I think any big changes around specials and all that kind of stuff, we tend to like to do at year-end, right? We'll look at where the company comes out from a tax basis at year-end. There's some funky intricacies of managing the BDC in terms of tax. And I think once we get through this fiscal year, look at the tax position we're in, we'll have a pretty significant may be more significant than we do on a quarterly basis discussion with the Board and figure out where we go from here. But we're in a great position, right? We can probably increase the dividend more as well as pay a special, but we just haven't determined whether that made sense at this point or not.

Got it. That's helpful. So switching gears a little bit. On the legislative front, there are 2 big infrastructure bills working their way through Congress. Are there anything in those bills that may impact Ares or your portfolio of companies that you're paying attention to?

Yes. I mean, look, I don't think so other than -- we don't have infra assets, so to speak, in the BDC, right, other than some of the things that we're doing on the -- if you want to consider it power gen or solar side, right, which may see some benefits. I think that these 2 bills probably will help sustain growth generally in the U.S., which is great, right? I mean I think it should be an impetus for continued growth. So I think there will be some modest positives, but I don't think there's going to be a huge impact in terms of what we're doing on a day-to-day basis. And we'll just wait and see. Once the top fleet passed and finalized, we'll dig in and see if there's anything going to have a direct effect on a particular portfolio company.

Okay. Got it. So just to wrap up, ESG has become a more important focus for investors and stakeholders. So can you maybe just comment on ARCC's overall ESG strategy?

Yes, absolutely. I mean, I'll take a couple of different points there. I mean I think ESG as well as things like DEI have become areas of increasing focus for us over the last couple of years. We think all these initiatives are good for our business, and we're taking some pretty important steps to formalize ESG, DEI, et cetera, throughout the firm. I mean, in the last 18 months, we've brought on board a kind of dedicated head of ESG, who's building a team who does report into [ Mike Arougheti who is the CEO ] of Ares these days as well as the head of DEI, who's the same C-level report, not to mention the fact that we've actually put in place a charitable foundation at the firm and have a Foundation Director as well reporting into Mike. So look, in every possible way, we're trying to be a force for good and trying to drive positive change. I would say if folks want some really deep detail and big dive on it, we actually published the first sustainability report at Ares that we've ever done. It's actually on our website. I think it's 40 or so pages, and it's a pretty good read in terms of all the initiatives that we have on the charitable giving front on the DEI front as well as on the ESG front. But for all of our investors, it continues to be of higher focus, and I think we are aligned with their thoughts on that and are doing a great job answering the bell in terms of the initiatives that we've put in place.

Okay. Great. That's very helpful. And with that, I'm all out of questions.

So thank you very much. I was happy to do it. Thanks so much for inviting me. Thanks, everybody, for joining, too.

All right. Bye.